I had the pleasure of interviewing Liz Ward, Principle of Virtuoso Legal, a boutique IP firm. If there’s any law firm that understands the holistic view and strategic use of intellectual property, it’s them. Although Virtuoso is a small boutique IP firm, they have outcompeted large magic circle firms by wining second place for ‘IP team of the year’ at The Lawyer Magazine Awards 2017.
I wanted to understand how they achieved this milestone and what businesses can learn about the strategic use of IP from their experience.
The main areas Liz covered are:
- The value of IP to businesses
- To whom IP is valuable in a business
- Value of IP beyond getting an opinion on freedom to operate (FTO)
- The differences between how SME’s approach IP compared to large firms
- Cultural differences in approaches to IP
The value of IP to businesses
Liz opened our discussion by explaining the value IP brings to a company.
“Oh, it tells you everything. It gives you the landscape as to what your competitors are doing. But the key thing is the intangible assets—particularly, patents, trademarks and designs are what keep you at the cutting edge of your particular field of technology or brand. And that's critically important—continually looking at where you've got protection. Where do you need to go next? How do you need to be on an international playing field? These are questions that board members and senior management should be asking themselves all the time.”
IP matters are important for all decision makers
IP is a subject that senior management teams and board members in every organisation should pay attention to, not just legal counsel. According to studies by Slowinski 2008 and Mehlman et al 2010, “alliances often fail because managers don’t consider that the alliance is also between all the alliances within each company, such as internal departments. This is crucial to approach the exploration phase of open innovation as a cross functional effort, not just involving the product development and legal departments.”
Liz dives deeper into this topic by explaining that there’s a shift where it’s not just the IP counsel that get involved in IP matters, but it’s all the key stakeholders in a company.
“We work with a lot of finance directors, research directors and marketing managers. Because, again, you have to take that holistic view. It's almost like looking at the whole business again and all the people within those businesses. And all the people who are making decisions, not just the in-house counsel. Often, when we're dealing with in-house counsel, they're not necessarily intellectual property experts. So, again, they tend to appreciate that all-encompassing view and that commercial mind-set about instructing external lawyers.”
There is more to IP than getting an opinion on FTO
Traditionally, businesses have tunnel vision when it comes to IP and only consult their law firm when they want an opinion on FTO or patentability. Liz explains that businesses need to look at the wider picture by asking smarter questions and law firms must step into their clients’ shoes.
“We don't get asked to do freedom to operate reports very often. We do get them occasionally. People will ask, for example, if they come from China or America into the UK, for some kind of landscaping exercise. But what I think we really excel at is taking a very holistic view of clients and taking a big picture look at their intangible assets and how that adds value to what they're doing. We don’t treat jobs as discrete jobs, we treat clients as proper clients. And we take time to get to know them, to understand their business, to understand where they want to be, what their ideal outcomes are. We ask a different set of questions than most law firms.
“So that's what our clients really appreciate about us, and what (increasingly) they are looking for all professional advisors to do. They want you to step into their shoes and say, "If I was you, this is what I'd do." You know, taking into consideration things like budget, things like future plans, commercial pressures, commercial conflicts. They don't just want a legal opinion.”
Larger companies are too inflexible whereas SMEs need to be educated
According to Business North Carolina Law Journal, “companies with significant patent portfolios often overlook the value of unused patents. Lawyers conducting an audit of Honeywell’s portfolio discovered unused autofocus patents which had been forgotten by Honeywell executives.”
You would expect larger companies to place higher importance on monitoring IP, because they tend to own so much of it. According to Liz, small businesses do not understand the importance of IP, whereas bigger companies do… but they go to the other extreme and routinely file patents without considering why they are doing so.
In Liz’s words:
"With a lot of larger companies, there tends to be more of a mechanical approach to it, ‘Oh, we've got a trademark, we need to do this, this, and this.’ And they've already got a pre-formed view. Whereas with SMEs, it's a bit more, ‘Well, we think we need a trademark.’ But quite often, they don't really understand the rationale behind it—which is why we spend the time getting to know their business and getting to know them, to explore what it is that's motivating their decisions.
“I think, particularly in the changing landscape, large companies can sometimes be too inflexible about the way that they deal with IP. And some of the really big companies don't even have it on their radar, which is a crying shame.
“Some of them routinely file patents without evaluating particularly why they're doing it. It’s very dependent on the individuals in the organisation. Sometimes, you get people who've done a lot of research and development and they understand the value of a patent portfolio— but they also understand the kind of financial downside in over-applying for patents. You need enough to keep you going but not too many to sink the ship, because you're paying patent renewal fees or patent prosecution fees.”
“In lots of cases, the only real protection you're going to get is patenting. But there's a balance between getting patent protection that you need commercially and filing for a patent on every last modification or change (without evaluating the commercial drivers). And again, I come back to asking the right questions, at the right time.
“And I think sometimes there's a lack of critical thinking in bigger companies or in some companies that file hundreds of thousands of patents globally. There's a lack of critical thinking about what they're doing that's actually in the best interest of the company.”
Cultural differences between UK and overseas companies
One of the surprising things I learned from Liz is that British companies don’t give IP enough importance. This is shocking seeing as the UK is only 0.9% of the world’s population, yet enjoys 3.2% of the world’s R&D expenditure and has 10.9% of citations in patents worldwide.
"You get a lot of U.S., Chinese, and Asian companies, where intellectual property is far higher up the agenda than it is for larger, British companies. I do think UK PLC has to up its game, particularly in view of Brexit—it has to really up its game in terms of prioritising intangible assets.”
There are lobby groups, such as The Confederation of British Industry (CBI), that are pushing for change in the way the UK government and businesses approach intellectual property. According to the Former Director General, John Cridland, “The government must set out a clear and unambiguous aspiration to make the UK the best place to create, develop and exploit IP… We must play to our natural strengths by supporting the UK’s world-class creative and other IP-rich industries, which are fundamental to growth.”
Top 3 reasons why IP is important for businesses
Value to the company
"Well, number one, it's a critical and core asset to many businesses these days. People are investing in clicks and not bricks. It used to be that a big company would have a massive portfolio, just of buildings and real estate. And that's no longer the case. A lot of companies are smaller, more flexible, but their key assets are intangible assets. So, number one is value to the company.”
"Number two is staying ahead of the competition. It's that commercial edge that you're given if you invest in research and development—whether it's research and development of brands or technology. It's important to get the right protections in place. For example, certainly in Europe, you only get one opportunity to file a patent. Once you've taken something to market, you then have closed the door on any kind of patent protection you might get on it. So, timing is critically important with that.”
“The third thing, for a lot of companies, is just knowing that they can monetise those assets too. You know, looking for opportunities for licensing, franchising or manufacturing under license. In a global economy, that's something that's going to be really important… if you just look at the changes that are happening—for example, digital printing . l can send someone a file from Leeds and they will be able to print it in Baltimore, Boston or Beijing. The intellectual property behind that—the licensing—and the commercialisation are key because you don't want to be giving that away. You don't want to be in a position where your potential customers, licensees or collaborators are simply copying that—simply reverse engineering it. Yet, technology is advancing at such a pace that reverse engineering and copying have never been easier.”
About Liz Ward
Liz is the Principle and Founder of award winning boutique IP firm, Virtuoso Legal. Virtuoso Legal, founded in 2007, came second place as "IP team of the year" at The Lawyer Magazine Awards 2017, outcompeting magic circle firms such as Allen & Overy, DLA Piper and Hogan Lovells.
Liz’s previous experience working for two highly respected international law firms, coupled with her 1st degree in Genetics and Cell Biology and 10 years healthcare business experience, give her an unrivalled legal and technical insight in any matters concerning complex scientific and technological detail.